Abu Dhabi's $10 billion December bailout to Dubai included $5 billion already committed by two banks controlled by the emirate, signaling Abu Dhabi's cautious approach to helping its debt-laden neighbor.
Analysts said news that Abu Dhabi had directly lent less than previously thought also indicated the wealthy emirate wanted more evidence of Dubai's fiscal probity, after helping it avert an embarrassing default on a state-linked bond.
A Dubai government spokeswoman said on Monday that the last minute lifeline on Dec. 14, included $5 billion raised from Al Hilal Bank and National Bank of Abu Dhabi which had been announced on Nov. 25.
Dubai rocked global markets that same day when it requested a standstill on $26 billion in debt linked to its flagship conglomerate Dubai World and its two main property developers, Nakheel and Limitless World.
"Obviously it's a lot less cash than we had assumed," said Raj Madha, an independent analyst based in Dubai.
"The interesting thing is what it says about the behavior of Abu Dhabi: whether they are just rushing through a large amount of money or whether they are providing funding where required."
Five-year credit default swaps for Dubai stood at 426 basis points, up from 423 basis points on Friday.
The $5 billion raised from the two Abu Dhabi banks was part of a $20 billion bond program announced early last year, and the UAE central bank had signed up for $10 billion of that in February.
But it had been unclear whether Abu Dhabi's $10 billion bailout on Dec. 14 — which enabled Dubai World to repay a $4.1 billion Islamic bond, or sukuk by developer Nakheel — was entirely new money or included the bond to the Abu Dhabi banks.
The government spokeswoman, who spoke on condition of anonymity, said the Gulf Arab emirate had already drawn down $1 billion of the $5 billion from the banks, provided under a five-year bond priced at 4 percent, with the rest yet to be used.
Dubai World is in the midst of talks with its creditors to finalize a formal standstill agreement that would last for six months, during which the conglomerate will restructure its remaining debt burden, estimated at some $22 billion.
Uncertainty over the restructuring has weighed on UAE markets as investors fret about the outcome amid a dearth of information and lack of transparency.
The conglomerate said this month it is "some time away" from presenting its formal plan to creditors, though it is expected in coming weeks.
"Clearly there were critical time deadlines last year that required extraordinary measures," said Mashreq Capital Chief Executive Abdul Kadir Hussain, of Abu Dhabi's bailout.
"But whatever form is required, whether it's the federation or Abu Dhabi, what is critical now is a well-documented plan for repayment and ... a strategy that will show how all of this will be taken care of."
On Monday, the Financial Times said some creditors to the conglomerate are seeking to offload loans to reduce their exposure to the conglomerate.
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